Law Firm Sees M&A, Financing Benefits in FERC Blanket Certificate Expansion Plan

A new legal analysis examines how FERC's proposed blanket certificate changes could affect pipeline development and investment decisions.

(P&GJ) — A new client alert from law firm Willkie Farr & Gallagher argues that FERC's proposed overhaul of its blanket certificate program could create near-term opportunities for pipeline operators, lenders, producers and midstream investors by allowing more projects to move forward through streamlined regulatory reviews.

According to a June 22 client alert from law firm Willkie Farr & Gallagher, FERC has proposed roughly doubling the cost thresholds for projects eligible under its blanket certificate program, a streamlined approval process used for routine pipeline work. If approved, the automatic authorization threshold would increase from $14.5 million to $30 million, while the prior-notice threshold would rise from $41.1 million to $86 million.

SEE MORE: FERC Proposes Sweeping Changes to Pipeline Blanket Certificate Rules

The proposal would also eliminate the cost cap for certain compressor station expansion projects and replace the inflation index used to adjust project limits each year. FERC said the changes are intended to better reflect rising construction costs and allow more routine projects to proceed through the streamlined process rather than requiring case-specific review.

Willkie attorneys Fredrick Wilson and Emerson Girardeau wrote that the changes could have significant implications for pipeline operators, midstream companies, lenders and producers by reducing permitting timelines and increasing flexibility for capital projects. The firm noted that inflation has pushed many compressor upgrades, meter station improvements and short pipeline replacements beyond existing blanket certificate limits, resulting in longer regulatory reviews.

FERC unanimously approved the Notice of Proposed Rulemaking on May 21. Comments on the proposal are due July 27, and the commission has extended a temporary waiver of existing blanket certificate cost limits through May 31, 2028, while the rulemaking process continues.

The law firm said pipeline operators may want to review planned capital projects to determine whether they could qualify under the proposed thresholds, while lenders and commercial counterparties may need to reassess transaction and financing provisions tied to FERC approvals.